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U.S. Securities and Exchange Commission

SECURITIES AND EXCHANGE COMMISSION
Washington, D.C.

Litigation Release No. 16808 / November 22, 2000

Securities and Exchange Commission v. Philip L. Choy, N.D. Ala., 94-C-2018-S.

The Securities and Exchange Commission today announced that on November 16, 2000, Judge U.W. Clemon of the United States District Court for the Northern District of Alabama entered Final Judgment of Permanent Injunction against Philip L. Choy in an insider trading case involving the securities of Comptronix Corporation, formerly located in Guntersville, Alabama. The Commission's Complaint, filed in August 1994, alleges that Choy unlawfully traded in Comptronix securities prior to an announcement on November 25, 1992 that top officers of Comptronix had perpetrated a financial fraud which caused the company to overstate sales and profits in prior and current years. The Complaint alleges that Choy was tipped as to the fraud by Harvey Pegram who was tipped by Richard Adler, then a Comptronix director who learned of the fraud during confidential board meetings on November 15, 1992. The Complaint alleges that Pegram placed a phone call to Choy at his business office, Magatronic Trading Ltd., located in Hong Kong on November 16, 1992. Approximately an hour and a half after Pegram's call, Choy telefaxed his brokerage firm and directed it to sell all of Magatronic's stock in Comptronix. As a result of trading prior to the public announcement on November 25, 1992, Magatronic avoided losses of $75,000.

The Final Judgment to which Choy consented, without admitting or denying the Complaint's allegations, enjoins him from further violations of Section 10(b) of the Securities Exchange Act of 1934 and Rule 10b-5 thereunder, and orders (i) Choy to pay a civil penalty in the amount of $45,000.

The Complaint was initially filed in August 1994 against Choy and the other named defendants. The case went to trial in August 1995. After a seven day trial the jury was deadlocked and the Court declared a mistrial. The defendants subsequently renewed their motions for judgment as a matter of law and the Court granted the motions. In addition, the Court entered default judgment against Magatronic in the amount of $75,000. The Commission appealed the District Court judgments to the Eleventh Circuit, which reversed the judgments, and remanded the case to the District Court. Comptronix declared bankruptcy in August 1996 and was purchased by Sanmina Corporation on November 1, 1996. All of the other defendants previously settled with the Commission and consented, without admitting or denying the allegations in the Complaint, to the entry of final judgments of permanent injunction from future violations of the securities laws and payment of civil money penalties and disgorgement.

See Litigation Releases 14198 (August 18, 1994), 14034 (March 29, 1994), and 16477 (March 21, 2000) for additional information.

http://www.sec.gov/litigation/litreleases/lr16808.htm


Modified:11/22/2000